Pam buys only thread and fabric, and she buys the quantities that maximize her utility. Her marginal utility from a spool of thread is 30 units and her marginal utility from a yard of fabric is 60 units
If the price of a spool of thread is $4, then you are sure that the price of a yard of fabric is ________. A) $4
B) $2
C) $8
D) $12
C
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On most days the price of a rose is $1 and 80 roses are purchased. On Valentine's Day the demand increases so that the price of a rose rises to $2 and 320 roses are purchased. Therefore, the price elasticity of
A) demand for roses is about 1.8. B) demand for roses is about 0.55. C) supply of roses is about 1.8. D) supply of roses is about 0.55.
If some of a person's wealth is in cash, it follows that
A) this person's monetary wealth will change as the price level changes. B) this person's monetary wealth will not change as the price level changes. C) this person is wealthier than a person who holds all his wealth in nonmonetary form. D) a and c E) b and c